COPAY ACCUMULATOR PROGRAMS 1, 2
In December 2017, the Kaiser Family Foundation (KFF) published a summary of analyses and trends in spending on prescription drugs, "What are the recent and forecasted trends in prescription drug spending?" The chart collection of the report, published on the Peterson-Kaiser Health System Tracker, showed that overall out-of-pocket spending for prescription drugs remained flat in 2016. Still, the report states that several analyses identify specialty drugs, used for the treatment of complex, chronic or rare conditions, as a primary driver of recent drug spending.
In this article, we will discuss copay assistance and examine the new copay accumulator programs: what they are, how they are used, and the impact of these programs particularly on specialty drugs and the patients who need them.
The term "copay" is generally used to describe the set amount the patient pays for a particular type of healthcare service, such as a $20 copay for office visits or $40 copay per prescription. While the term "coinsurance" is generally used to describe a percentage cost of a healthcare service. For instance, a patient may have a 20% coinsurance for hospitalization, whereby the patient pays 20% of the cost and the health insurer pays the other 80%. However, both the copay cards and the copay accumulator programs that we are discussing refer to the patients cost under these programs as copays, so for ease of discussion we will use the term copay throughout this article.
As prescription drug costs have increased, so too have patient costs for these drugs. Patient copays have increased because nearly all national payers have instituted copays as a percentage of the drug costs or they have established tiers with preferred generic drugs at the lowest tiers, which have the lowest copays, and nonpreferred drugs and specialty drugs, in the highest tiers, which generally have higher copays that are often a percentage of the drug cost. Drug tiers are prevalent in private health insurance plans as well as Medicare Part D plans. In addition to the drug copays, many patients also have a deductible for which they are responsible before their prescription benefits begin.
Patients are facing increased health care costs including higher premiums, deductibles, and cost-sharing on drugs. The Kaiser Family Foundation (KFF) reports that since 2006, deductibles have increased 300 percent and there has been an 89 percent rise in what patients pay in coinsurance.3
Copay Assistance Programs
In response, many pharmaceutical companies began funding copay card/coupon programs to help people with private insurance with their copayments (and in some cases their deductible) on their prescription drugs. When patients use a copay card, the patient's copay is reduced and the manufacturer or charity pays the balance of the copay. Copay cards/coupons may not be used for drugs purchased with federal healthcare insurance, including Medicare and Medicaid.
The inclusion of specialty drugs in the top drug tiers, with the patient copay representing a percentage cost of the drug, has created financial hardship for patients that need these drugs to manage their disease. KFF reports that analysis of data from the Express Scripts 2016 Trend Report shows the top five specialty therapy classes (in order of cost) in 2016 to be inflammatory conditions, oncology, multiple sclerosis, HIV and hepatitis C.
A recent Centers for Disease Control (CDC) article on medication adherence for chronic disease management states that lowering economic barriers to prescribed medications improves adherence rates and is associated with improved clinical outcomes. Conversely, direct health care costs associated with nonadherence is now estimated to have grown to $100-$300 billion of U.S. health care dollars spent annually.4
Today, many patients with private insurance are only able to afford their specialty prescription drugs through copay assistance programs. These patients rely on copay assistance to pay the high copays implemented by the insurer. Copay assistance programs provide access for patients who might otherwise not be able to afford specialty drugs. Recognizing this, many providers employ staff to assist patients in accessing these programs.
The total dollar amount available to a patient under the typical copay assistance program is set to ensure that the patient's copay would be paid up to the point when the patient's deductible and out-of-pocket maximum for the year would be met. After which the patient would not be subject to copays for the remainder of the year.
Pharmacy Benefit Managers Discounts & Rebates
Copay assistance programs are not without critics. Health insurers and Pharmacy Benefit Managers (PBMs) argue that copay assistance programs remove the financial incentive for patients to choose lower cost drugs and circumvents their formulary. However, this isn't always the case with specialty drugs, many of which don't have a lower cost alternative.
The USC Schaeffer Center for Health Policy & Economics found that of drugs offering coupons in 2014, 12 percent of the couponed drugs had no substitute at all, and 39 percent had only single-source branded close therapeutic substitutes (CTS). Further, the study found that the CTS available may be preferred by the PBM but were similarly priced to the drug offering the coupon.
To understand their resistance to copay assistance programs, it is helpful to understand how PBMs and insurers function and develop their formularies. In general, PBMs negotiate with pharmaceutical manufacturers for lower prices, and set the reimbursement limits with pharmacies. In many cases, PBMs also negotiate for rebates, which are paid by the manufacturer after the drug is purchased, in order for their drug to be designated a preferred drug. In turn, PBMs develop and manage formularies for the insurers to steer beneficiaries to their preferred drugs, and they are paid by the insurer to process claims.
According to a recent report by the Drug Channels Institute, pharmaceutical manufacturers off-invoice discounts, rebates and price concessions to PBMs rose from $43 billion in 2007 to $127 billion in 2016.
The savings from these discounts and rebates have not traditionally been passed on to patients. Although, recent criticism of the potentially perverse incentives for insurers/PBMs to prefer drugs for which they receive higher rebates (regardless of the drug cost to patients) has resulted in a call for transparency on drug rebates and prompted some payers to announce they will begin sharing the rebate savings with their beneficiaries. Notably, UnitedHealthcare – which owns the PBM OptumRx – recently announced that effective January 1, 2019, they will pass on manufacturer rebates to people covered by certain employer-sponsored health plans.
Copay Accumulator Programs
In response to copay assistance programs, insurers, largely through their PBMs (which are increasingly owned by the insurers through vertical integration), have begun adopting copay accumulator programs. These programs are also called by various other names by the particular insurer, for example, UnitedHealthcare calls their copay accumulator program the Coupon Adjustment: Benefit Plan Protection Program.
Under the copay accumulator programs, payments made by the copayment assistance programs do not count towards the patient's deductible or out-of-pocket maximum, only the amounts paid directly by the patient will count to fulfill the deductible and yearly out-of-pocket maximum. Once the patient assistance funds are depleted, the patient will be responsible for any deductible and their full copay amount on the drugs until their out-of-pocket maximum for the year is met. After which the patient would not be subject to copays for the remainder of the year.
In a January 3, 2018 Drug Channels Institute article, Copay Accumulators: Costly Consequences of a New Cost-Shifting Pharmacy Benefit5, Drug Channels illustrates the financial impact of a copay accumulator program for specialty drugs on the plan sponsor, manufacturer, and patient.
The example shows both the conventional scenario of a copay program and the copay accumulator scenario for a patient with a 30% coinsurance on a specialty drug prescription, a $3,000 deductible, a $6,000 annual out-of-pocket maximum and who participates in a manufacturer copay program with a maximum annual value of $15,000.
In the conventional scenario, the manufacturer pays the patient's annual deductible and the coinsurance amount. Once the patient's annual out-of-pocket maximum is reached, the plan pays the full cost of the prescription for the remainder of the year.
In the accumulator scenario, the manufacturer's payments do not count towards the patient's annual deductible or out-of-pocket maximum, and the total value of the manufacturer's copay program is exhausted after five months. The patient's out-of-pocket costs go from $0 to $6,000 (the annual out-of-pocket maximum). For the full year, the plan's total expenses decrease by 66%, and the plan does not pay the full amount of the prescription until the last two months of the year.
It is inevitable that copay accumulator programs will increase the financial burdens on patients and some of these patients who have benefited from the copay programs will be forced to discontinue treatment due to their inability to pay their annual deductible and out-of-pocket maximums.
UnitedHealthcare (UHC) began implementing their new program, "The Coupon Adjustment: Benefit Plan Protection Program" effective January 1, 2018. UHC states "payments made through a manufacturers copay card program will no longer count towards a member's deductible and out-of-pocket maximum when filled at BriovaRx, the OptumRx specialty pharmacy, BriovaRx specialty pharmacy, UnitedHealthcare's primary designated specialty pharmacy." UHC states the policy applies to all UHC integrated commercial business.
UHC sent letters in November, and again in December, to all their members that will be impacted by the new Coupon Adjustment: Benefit Plan Protection program. UHC also states that information on the copay card amount and an explanation will be available to members on myuhc.com and on the member's explanation of benefits (EOB).
Other health plans may not be as forthcoming with information on any changes associated with a copay accumulator program. In fact, a Drug Channels article in June 2018, examined how difficult it was to find information on copay accumulators in the state of Florida, and found that "All plans buried the information, making it difficult to determine their policy. Finding the exact language required following a trail through multiple links and documents and was often found in documentation that is not available to a consumer until after enrolled in the plan."6
For this reason, patient financial assistance staff and financial navigators need to be aware of, and may need to educate patients on, the copay accumulator programs and the impact on the patient's out-of-pocket costs.
In some instances, commercial payers are limiting the use of copay cards to drugs that don't have a therapeutically equivalent lower cost generic or when the patient has completed step therapy or has received prior authorization for the branded drug.
Certain states including Massachusetts and California limit the use of copay cards/coupons to drugs that do not have a generic equivalent.
On October 9, 2017, California Governor Jerry Brown signed into law Assembly Bill No. 265.7 Effective January 1, 2018, the bill generally prohibits manufacturers from offering in California any discount, repayment, product voucher or other reduction in an individual's out-of-pocket expenses including copayments, coinsurance and deductibles for any prescription drug that has a lower cost therapeutically equivalent generic drug on a lower cost-sharing tier available through the individual's healthcare plan. The prohibition does not apply to a branded prescription drug, until a drug that is therapeutically equivalent to the branded drug has been nationally available for three calendar months.
Other exemptions to the bill include the following:
- A discount, repayment, product voucher, or other payment to a patient or another person on the patient's behalf for a prescription drug required under a United States Food and Drug Administration Risk Evaluation and Mitigation Strategy for the purpose of monitoring or facilitating the use of that prescription drug in a manner consistent with the approved labeling of the prescription drug.
- A single-tablet drug regimen for treatment or prevention of human immunodeficiency virus (HIV) or acquired immune deficiency syndrome (AIDS) that is as effective as a multi-tablet regimen, unless, consistent with clinical guidelines and peer-reviewed scientific and medical literature, the multi-tablet regimen is clinically equally effective or more effective and is more likely to result in adherence to the drug regimen.
- The individual has completed any applicable step therapy or prior authorization requirements for the branded prescription drug as mandated by the individual's health insurer, health care service plan, or other health coverage.
- A discount, repayment, product voucher, or other reduction in an individual's out-of-pocket expenses is not associated with his or her health insurance, health care service plan, or other health coverage.
- Rebates received by a state agency.
The bill does not prohibit or limit assistance to a patient provided by independent charity patient assistance programs that meet certain requirements. Additionally, manufacturers can still offer free drugs as long as they are free to both the patient and insurer.
For more information, access Assembly Bill No. 265 at the following link:
The issue of drug cost and patient access to high-cost drugs is complicated, and like the issue of rising healthcare premiums and deductibles, will require all stakeholders to work together to come up with a solution that will preserve patients access to care.
In the meantime, patients and providers need to be aware of the copay accumulator programs, what they are, how they are implemented and the impact on patients' access to necessary drugs. The new copay accumulator programs will most negatively impact patients that currently rely on copay assistance programs to cover high-cost specialty drugs that don't have a lower-cost therapeutically equivalent drug.
VA AUDITS & PAYMENT TAKEBACKS 8, 9, 10, 11
Veterans eligible for medical care through the U.S. Department of Veterans Affairs (VA) health care system can receive it from any VA doctor or facility and in some cases from local community care providers, paid for by the VA through the Veterans Choice Program (VCP).
The VCP was created through the Veterans' Access to Care through Choice, Accountability, and Transparency Act of 2014, also known as the Veterans Choice Act. The law was in response to the discovery (through a nationwide VA Access Audit 12) of the VHA system's systematic failure to provide timely care to Veterans and the subsequent deaths attributed to delayed care.
Through the VCP, a Veteran can receive care from a community provider, when certain parameters are met. The Veterans Health Administration (VHA) lists the following eligibility criteria:
Veterans may be eligible to receive care through the Veterans Choice Program based on one or more of the following conditions:
- VA can't make an appointment for the Veteran at the nearest VA medical facility within 30 days of the clinically indicated date (the date the Veteran and their VA provider agree should be the next date the Veteran is seen for care)—or, if VA can't determine this date—the date the Veteran prefers to be seen next
- VA can't provide services the Veteran needs
- Veteran lives more than 40 miles (driving distance) from the nearest VA medical facility with a full-time primary care physician
- Veteran has to travel by air, boat, or ferry to get to the nearest VA medical facility
- Veteran faces an excessive burden in traveling to the nearest VA medical facility (such as geographic challenges, environmental factors, or a health problem that makes it hard for you to travel)
For several years, in response to the need for timely cancer care for Veterans and with the approval of the VA, community oncology practices have been seeing and treating Veterans who meet the eligibility for the VCP. Payments to these providers were not made directly by the VA but through third party administrators (TPAs) Health Net Federal Services LLC (Health Net) and TriWest Healthcare Alliance Corporation (TriWest).
In October 2014, the VA amended their Patient-Centered Community Care Program (PC3) contracts with TPAs Health Net and TriWest to include administration of the VCP, including establishing provider networks, scheduling appointments, receiving medical documentation, and making payments for medical care on behalf of VA.
Under the VCP contract, the VA makes payments to the TPAs, not the providers. The Veterans Health Administration (VHA) states that the TPAs are responsible for paying their providers, the VA then reimburses the TPAs for payments the TPAs make to providers for veterans' medical care obtained through the VCP.
In response to an OIG Hotline allegation that the VA was paying full price for physician services to a non-VA care provider (rather than paying lower contract rates), the VA Office of Inspector General undertook a review of alleged overpayments for non-VA care made by Florida VA facilities. The OIG initial review found that VHA payments exceeded Medicare rates in 52 of the 55 examples provided by the complainant, and 44 of those were for physician-administered drugs.
The OIG then expanded their review to all payments made by Florida VA facilities to non-VA care providers for physician-administered drugs from October 1, 2012 through March 31, 2016. The June 2017 VA OIG report, states that a review of all payments for physician-administered drugs made by Florida VA facilities to non-VA care providers from October 1, 2012 through March 31, 2016, found that 35.8% of the payments were overpayments totaling approximately $17.2 million. The overpayments were said to have occurred because VHA did not utilize Medicare payment rates for physician-administered drugs.
The report goes on to say that the Chief Business Office (CBO) did not upload the Medicare payment rates to the Fee Basis Claims System (FBCS) and when Medicare pricing is not available in the FBCS, VA typically pays billed or VA fee schedule amounts. According to the report, when the CBO took over management of the non-VA healthcare claims payment process in October 2014, it specifically instructed claims processors not to pay Medicare rates for physician-administered drugs.
On January 30, 2017, CGI Federal announced it was chosen by the U.S. Department of Veterans Affairs to conduct healthcare claims auditing and recovery services focusing on payments made to non-VA care providers through the VCP from 2013-2017. The VHA Office of Community Care's 2/28/18 Fact Sheet: Audit Contract for Recovery of Community Care Overpayments 13 describes the audit process and lists Frequently Asked Questions (FAQs) on the claims CGI will be reviewing as part of the audit.
The Fact Sheet FAQs include a question on why CGI has issued so many findings letters related to physician-injectable drugs. The VA responds by referring to the June 2017, VA OIG report which concluded that the VA should have been paying physician-injectable drugs, commonly referred to as "J-codes," at Medicare rates, rather than billed charges, since February 2011. The OIG recommended that the VA recover the overpayments and in response, the VA OCC has asked CGI to prioritize J-code reviews.
The VA OCC Fact Sheet also states that claims for services provided by non-VA providers without a contract will be the focus of the claims audits. And much like the Medicare RAC audits, as part of the contract, CGI will perform the audit work and receive a percentage of the recovered funds.
On September 17, 2017, the Department of Veterans Affairs Inspector General (VA IG) released a memorandum of an investigation and the status of two audits of the VA Choice claims payment processes. The memorandum states that the TPAs cite the lack of a policy and procedure manual to guide the TPAs in processing claims as the cause of confusion and lack of clarity resulting in payment delays and payment errors.
In a December 21, 2017 VA OIG report Veterans Health Administration Audit of the Timeliness and Accuracy of Choice Payments Processed Through the Fee Basis Claims System, the VA OIG concludes the OCC did not appropriately follow the following internal control principles resulting in payment errors and delays:
- Create clear written policy for the payment of claims
- Ensure access to quality information is available for payment processing staff
- Use a well-designed information system to address the risk of overpaying medical claims
- Establish monitoring activities to ensure internal controls are working
At the end of 2017, community oncologists began reporting that they were receiving demands from CGI for recoupment of claims payments paid between FY 2013-2017, for services provided to Veterans through the VCP, and which CGI has retroactively determined to be overpayments. Most of the community oncologists report they were given no notice that the VA would only pay Medicare rates, and when they billed customary and usual rates for out-of-network services, they were paid in full on what they billed. These practices also report that when they questioned the accuracy of the payments they were assured that the payments were correct.
Most of these community oncology providers report that although they received approval to provide services to eligible veterans, they did not have a contract and were not provided a fee-schedule for out-of-network providers even upon multiple requests for a fee-schedule. As such, the practices billed, and were paid, the standard out-of-network rates for the treatments. These same practices also report frequently having experienced payment delays of 120 days or more.
Several oncology organizations are working on behalf of community oncologists and urging Congress to address the VA reimbursement takeback. On April 11, Barry Fortner, SVP & President of Amerisource Bergen's Specialty Physician Services and Dr. Harsha Vyas, M.D., of Cancer Center of Middle Georgia, met with Congressman Rick Allen (R-GA), as well as staff from the offices of Senate Veterans Affairs Committee Chairman Johnny Isakson (R-GA), House Veterans Affairs Committee Chairman Phil Roe (R-TN), and House Veterans Affairs Committee Members Gus Bilirakis (R-FL), Julia Brownley (D-CA), and Brad Wenstrup (R-OH).14
The Community Oncology Alliance (COA) is also working on behalf of community oncology practices to manage the VA takeback issue, meeting with representatives in the office of the United States Secretary of Veteran Affairs, the VA Office of Community care, members of Congress and their staff on the House and Senate Committees on Veterans Affairs, as well as other members of Congress. 15 COA urges community oncology providers to contact them if they are experiencing problems with the VA takeback issue, contact Mary Kruczynski at Maryk@coacancer.org.
In the meantime, providers are urged to request a formal Request for Reconsideration when they disagree with CGI's audit results and to request a telephone appeal if the request for reconsideration appeal is denied. Instructions for requesting Reconsideration are included in CGI's findings letter.
4 CDC Grand Rounds: Improving Medication Adherence for Chronic Disease Management — Innovations and Opportunities. Accessed April 2, 2018.
9 VA Office of Inspector General. Office of Audits and Evaluations. Veterans Health Administration. Audit of the Timeliness and Accuracy of Choice Payments Processed Through the Fee Basis Claims System. https://www.va.gov/oig/pubs/VAOIG-15-03036-47.pdf. Accessed May 5, 2018.
11 VA Office of Inspector General. Office of Audits and Evaluations. Veterans Health Administration. Review of Alleged Overpayments for Non-VA Care Made by Florida VA Facilities. https://www.va.gov/oig/pubs/VAOIG-15-01080-208.pdf. Accessed May 5, 2018.
15 Community Oncology Alliance. Communityoncology.org. March 26: VA Audit and Takeback Issue. Accessed May 5, 2018.